By GREGORY N. HEIRES Retailers bemoan the estimated $14.4 billion they lose each year to shoplifting. What they don’t like to acknowledge is that they steal more than that amount—an estimated $15 billion—by paying their workers less than the minimum … Continue reading →

Today, the disparity in household wealth between whites and blacks is a national disgrace.

In 2013, the average household wealth of blacks was $85,000 compared to $656,000 for white households, according the “The Ever-Growing Gap: Without Change, African-American and Latino Families Won’t Match White Wealth for Centuries, a report by the Institute for Policy Studies (IPS) and Center for Expanding Economic Development (CFED). The Forbes 400 own more wealth ($2.35 trillion) than the entire black population in the United States.

A Growing Wealth Divide

The wealth gap has worsened over the past 30 years: The average household wealth of whites was $355,000 in 1983 while that of blacks was $67,00.

Between 1983 and 2013, the wealth of white families grew by 84 percent, or three times the rate of growth of the black population. If the wealth of the average black household grows at the same pace as it did during the past 30 years, it would take black families 228 years –or 17 years less than the 245 years of slavery in this country—to accumulate the same amount of wealth that whites own today.

Our national dialog on inequality usually focuses on differences in income. Yet it’s the wealth divide that best explains the social cost of inequality.

As noted by the IPS/CFED report, “While income is necessary to meet daily expenses, wealth helps families get through lean times and empowers them to climb the economic ladder. Wealth is money in the bank, a first home, a college degree and retirement security—it’s the countless opportunities afforded by having savings and investment.” Being born with a silver spoon in your mouth gives you a wonderful advantage in life.

Some say the racial wealth divide is rooted in individual choice and the African-American family structure, particularly homes headed by single mothers.

An example of this line of reasoning is the widely criticized report issued by Sen. Daniel Patrick Moynihan more than 50 years ago. The report, “The Negro Family: The Case National Action,” blamed racial inequality, poverty and crime on the black family structure.

In reality, the intergeneration transfer of wealth and other aspects of white privilege offer a better explanation about why wealth inequity persists, according to a recent report by Demos and the Institute on Assets and Social Policy (IASP) at Brandeis University.

The Roots of the Wealth Disparity

The report, “The Asset Value of Whiteness,” disputes the common perception that individual differences in education, family structure, full- and part-time work, and consumption explain the gap.

“In each case, we find that individual choices are not sufficient to erase a century of accumulated wealth: structural racism trumps personal responsibility,” the authors of the report say.

Thanks to inheritance and other factors, white families are able to accumulate much more wealth than black families.

In 2013, the median wealth of two-parent white households with children was $161,300. The median wealth of two-parent black family with children was $16,000. White single mothers are wealthier than married black couples because of white privilege and inheritance.

Educational attainment is often cited as a factor that levels the playing field between whites and backs. Yet the typical white adult who attends college has 7.2 times the wealth of the median black adult. Certainly, a college education isn’t enough to close the racial wealth gap.

Generally, black college students carry a higher debt burden than white students, who are more likely to come from wealthier families. Discriminatory practices in housing, banking and education prevent black graduates from accumulating wealth at the same rate as whites.

Working full-time also isn’t enough to close the wealth gap, according to the report issued by Demos and IASP. (The authors are Amy Traub of Demos and Laura Sullivan, Tatjana Meschede and Tom Shapiro of IASP.)

The wealth of the white family with a full-time worker is $82,400. The corresponding black family has $10,800 in accumulated wealth, according to the Survey of Consumer Finances data.

Blacks accumulate wealth more slowly because of their lower income. In 2012, the median weekly wage of full-time white workers was $792. The typical full-time black worker earned $621.

Can differences in spending habits explain the racial wealth gap? No.

Personal financial advisor typically recommend that to accumulate wealth their clients should spend less and devote more of their funds to savings and investments. But that strategy does not appear to have much of an effect on the wealth gap.

White families spend more than black families with similar incomes, yet those white families have greater wealth than the black families.

“While spending less and saving more may be excellent advice for individuals, the evidence suggests that personal spending habits are not driving the racial wealth gap and cannot succeed in closing it,” the Devos/IASP report says.

So, the racial wealth gap is rooted in years of discrimination and public policy that favor whites– not individual behavior.

“Building a more equitable society will require a shift in focus away from individual behavior towards addressing structural and institutional racism,” the report concludes.

The CFED/IPS study has a number of recommendations. They include conducting an audit to identify which federal policies exacerbate inequality. Reforming the tax code to use more than a half-trillion dollars spent on unfair taxes (the wealthy benefit disproportionately retirement, home purchasing and investment and saving policies) to address the wealth divide. The report also calls for more progressive taxation and a study of a wealth tax.

“By acknowledging the role that public policies continue to play in fueling the racial wealth divide and by fixing unfair wealth-building programs so that they expand opportunity for all, we can begin making the investment needed to close the racial wealth divide,” the report concludes.

By GREGORY N. HEIRES Union-busting law firms and right-wing groups charge that unions are fleecing members through mandatory dues charges. What’s worse, they say, workers get little back for their contributions. “Union Dues Are A Prohibitively Bad Investment” blared the … Continue reading →

By GREGORY N. HEIRES
It’s always eye-opening to look at the divide between Wall Street and Main Street.

The income gap gives you a sense of the depth and cost of inequality in the country, where an estimated 42 percent of workers earn less than $15 an hour. That’s right, more than four of every ten workers!

The $25 billion in bonuses given out to 172,400 Wall Street employees in 2015 would be enough to double the earnings of the 895,000 Americans who work in full-time jobs at the federal minimum wage of $7.25 per hour, according to “Off the Deep End: The Wall Street Bonus Pool and Low-Wage Workers,” a recent report of the Institute for Policy Studies.

Highlighting the divide between Wall Street and Main Street, the Fight for 15 movement has created a political climate to allow for state and local initiatives to boost the minimum wage. Both New York and California have raised their minimum wage to $15 an hour.

Democratic presidential candidate Sen. Bernie Sanders, who put inequality at the center of this year’s Democratic primary race for the presidency, helped make the $15 minimum wage–once regarded as a pie-in-the-sky proposal even by some on the left–a realistic goal. Democratic presidential candidate Hillary Clinton is for boosting the federal minimum wage to $12 an hour while encouraging local $15 an hour initiatives. Republican candidate Donald Trump has flip-flopped on this issue.

“For Wall Street employees, annual bonuses come as an extra bonus on top of their base salaries, which averaged $404,800 in 2014,” the IPS report states. On top of their bonuses and salaries, executives often receive large stock options and restricted stock gains.

The 2015 bonus pool in 2015 would be enough to bring the wages of the workers in any of the following groups up to $15 an hour:

A pay rate of $15 an hour is what’s needed to cover basic living costs in most areas of the country, according to the National Law Project. As a society, do we want to tolerate an out-of-balance economy in which more than two out of five workers earn less than $15 an hour?

By increasing the minimum wage, the government would not only raise the income of low-wage workers, it would also stimulate the economy.

Low-wage workers typically spend their entire paycheck to meet their day-to-day expenses, sparking additional economic activity. In contrast, the wealthy tend to save and invest more of their earnings.

“The Wall Street bonus season may coincide with an uptick in luxury goods sales, but a minimum wage hike would give America’s economy a much greater boost,” the IPS briefing says.

The government could address inequality by raising the Earned Income Tax Credit, implementing a transaction tax on financial trading and adopting more progressive income tax policies. Closing a loophole that allows certain earnings of hedge fund managers to be taxed as capital gains rather than as income (with its higher rate) would also help curb inequality.

As an economic policy, raising the minimum wage makes sense. Ethically, in our economically polarized county, it’s ethically the right step to take.

By GREGORY. HEIRES Small government advocates tout privatization as a way to reduce costs and improve services in the public sector. But around the country, the privatization of state and local government services has a shoddy track record. Governments started … Continue reading →

The gig economy is receiving a lot of attention these days as online businesses like Uber car service and Airbnb Inc. hoteliers prosper.

Optimists predict online businesses will continue to grow rapidly and workers will increasingly find their niche in jobs in that sector.

This Pollyannaish outlook views the gig economy as an economic sector where we can enjoy our freedom to define ourselves and fulfill our sense of entrepreneurship and creativity through the free market–and earn a lot of money.

Some analysts believe that the gig economy will be the answer to the failure of the economy to produce good jobs since the Great Recession and, in the long run, lead to a reduction of economic inequality.

Others are more skeptical.

“In reality, the so-called ‘gig’ economy is really two quite different economies,” former Labor Secretary Robert Reich wrote recently on his Facebook page. “Wealthier Americans are using ‘gig economy’ platforms to rent assets like their homes (Airbnb) or sell products they own or make,” he wrote, commenting on a JP Morgan Institute report that questions whether the gig economy will reduce inequality.

“By contrast, low-income workers sell their direct labor, such as working as Uber drivers or TaskRabbit movers. In other words, the gig economy is giving those who already have wealth a higher return on that wealth. But it’s not giving those who only have their own labor a higher return on that labor, because it’s enabling corporations (like Uber) to shift business risks onto workers–and those added risks are reducing economic security and predictability.”
Unmasking the Gig Economy

Panelists questioned the bullish view of the gig economy during a May 6 forum called “Unmasking the Gig Economy: Harmful or Helpful?” at the 41st Annual Convention of the Metro New York Labor Communications Council, which represents labor and community communications professionals in the New York City area.

While recognizing that employment in the gig economy may represent what more and more workers will face in the future, panelists warned of the abuses, low wages and exploitation accompanying this process.

Without government oversight and regulation, the gig economy could just be a continuance of four decades in which workers have experienced declining and stagnating wages, financial insecurity and an erosion of benefits accompanied by skyrocketing inequality.

“Is this the end of employment?” the moderator, investigative reporter Robert Hennelly, said.

In the gig economy, workers will need to look after themselves by bargaining for their pay and rights and learning how to analyze contracts, panelists said. Meanwhile, unions should adapt to the new economy by reaching out to these workers.

A positive sign was the decision of writers at Gawker online media to vote for a union last year. Workers at other online journalism businesses have followed.

“Our primary task is to push back,” said panelist Katie Unger, a writer with City Limits magazine.

Declining Traditional Jobs

The gig economy reflects the growth of alternative work arrangements in the United States.

As the country continues its shift to a service economy, the number of temporary help agency workers, freelancers, contract workers, on-call workers and independent contractors are increasingly defining the 21st century economy.

The percentage of workers in these alternative work arrangements increased from 10.1 percent of the workforce in February 2005 to 15.8 percent in late 2015, according to a March study by economists Lawrence F. Katz of Harvard University and Alan B. Krueger of Princeton University.

An alarming finding of the study is that alternative work arrangements apparently account for all of the net employment growth in the United States from 2005 to 2015.

Workers employed in alternate work arrangements increased by 9.4 million during that period while workers with traditional jobs dropped by 0.4 million. A new study by Intuit Inc. projects that the contingent workforce — which has grown from 17 percent 25 years ago to 36 percent today — will reach 43 percent by 2020.

Estimates of the size of the gig economy vary quite a lot.

Krueger and Katz conclude that 0.5 percent of the workers in the United States provide services through online intermediaries. The JP Morgan Chase Institute estimates 3.1 percent of adults earned income through online work between October 2014 and September 2015.

The gig economy is part of the casualization of the economy that at least so is failing to address income inequality and the lack of good jobs.

So, the gig economy may be lining the pockets of owners, but it too often means an unstable job with no benefits, no union and an uncertain income for workers.

By GREGORY N. HEIRES
Over a 30-year career, union representation can mean an additional compensation of at least $1 million for a full-time professor at public regional universities, according to a recent study.

The study is good news for adjuncts and other professors around the country who are fighting for union recognition.
Increasingly, instructors at private and public higher-education institutions see unions as an answer to a lack of benefits, dismal pay and the disappearance of tenure-track positions.

Nationwide, the faculty and graduate students at nearly 70 colleges and universities have voted to unionize in the past three years, according To William A. Herbert, executive director the National Center for the Study of Collective Bargaining in Higher Education and the Professions at Hunter College in New York City.

The positive findings about union representation at regional public schools come from a paper by Stephen G. Katsinas, Johnson A. Ogun and Nathaniel J. Bray of the Education Policy Center at The University of Alabama.

In 2011, the latest year for which data on salary and benefits at the 390 regional universities in the United States is available, full-time faculty covered by collective bargaining agreements at those institutions received $17,000 more in total monetary compensation than non-union instructors. Unionized instructors earn anywhere from 5 percent to 50 percent more than their non-union counterparts, according to the study.

The benefit of unionization is evident at Tufts University, where part-time lecturers voted to unionize in 2014.

At the private university, instructors of romance languages saw their pay increase 40 percent after unionizing. Adjuncts are now covered by one- to three-year contracts, depending on their experience. They are paid at least$ 7,300 per course. Adjuncts with eight years of experience receive $8,760 per course.

Colleges and universities began using contingent instructors as a way to reduce costs during the economic downturn in the 1970s. The number of full-time faculty plummeted by 77 percent from 1971 to 2011, according to the Dept. of Education.

Today, as many as 1 million adjuncts work at colleges and universities nationwide.

More than 50 percent of the faculty in the country is part-time instructors or adjuncts, according to The American Prospect. Adjuncts teach about a third of the classes at community colleges and about a fourth of the classes at research universities, according to a Coalition on the Academic Workforce study.

Years ago, most of the faculty represented by unions were full-time professors on tenure track.

Today, with the growth of part-time faculty, 90,000 of the American Federation of Teachers’ 215,000 members employed in higher education are contingent workers, a group that includes faculty in non-tenure track positions, part-timers, graduate students and post-doctoral students. The union represents 100,000 full-time instructors on tenure track.

The Service Employees International Union is carrying out a nationwide organizing campaign of higher education instructors called Faculty Forward. The project has an ambitious goal of signing up hundreds of thousands of adjuncts.

Clearly, the union message resonates with contingent faculty.

The Faculty Forward campaign has succeeded in 38 of the 41 representation votes held since the organizing effort began in 2013. All told, SEIU has organized around 25,000 contingent faculty in recent years.

The appeal of unions to adjuncts isn’t surprising.

The disappearances of stable unionized blue-collar jobs and the growth of precarious, low-wage service work are probably the most frequently cited examples of how the 21st century economy isn’t working for most Americans.

But the plight of adjuncts shows how professional workers are also victims of four decades of declining and stagnant wages and increasing inequality. Nearly a quarter of adjuncts receive some form of public assistance, such as food stamps or Medicaid, according to a study by the University of California at Berkeley.

Many adjuncts earn poverty-level wages. They are among the millions of workers whose compensation falls below $30,000 a year.

Adjuncts typically earn about $2,700 per course. That amounts to about $22,000 a year for four courses per semester. Once class preparation, meetings with students and grading are considered, adjuncts say their pay probably works out to less than $15 an hour.
The SEIU campaign’s long-term goal is help adjuncts receive a guaranteed a minimum compensation of $15,000 with benefits for each course they teach.

A lofty goal?

In November 2012, when fast-food workers in New York City launched their campaign to be paid $15 an hour and win union representation, many analysts—including progressives—described it as an unrealistic, pie-in-the-sky hope.

Well, this year, New York State and California have adopted $15 an hour minimum wage plans.

By GREGORY N. HEIRES
Inequality around the world is deepening as the international elite sets the rules of the global economy, which allows them to accumulate vast wealth and income at the expense of everyone else.

The widening inequality stifles economic growth and poses a threat to political and economic stability.

“Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” concludes “An Economy for the 1 %,” a recent report by Oxfam International. “The global inequality crisis is reaching new extremes.”
Squeezing the Middle Class and Poor

Today, the richest 1 percent holds more wealth than the rest of the people in the world combined according to the Oxfam report.

In 2015, 62 billionaires had accumulated the same wealth as 3.6 billion people, the bottom half of the world’s population. They increased their wealth by 44 percent in the five years that followed 2010, amassing $1.76 trillion.

During the same period, the bottom half of the world’s population saw its wealth decline by 41 percent, a little over $1 trillion.

Some analysts suggest the Oxfam report overstates the growth of inequality. But in a sense that’s beside the point: It’s simply undeniable that inequality has deepened in recent decades as the concentration of income and wealth has become greater. Other reports also cite disturbing data:

• A 2015 Credit Suisse report concludes that the top 1 percent own half of the world’s wealth. The report says an individual must have more than $759,900 to be in that exclusive class.

“Middle class wealth has grown at a slower pace than wealth at the top end,” said Tidjane Thiam, the chief executive officer of Credit Suisse, when the report was released.

• A 2015 report by the International Monetary Funds says, “Estimates suggest that almost half of the world’s wealth is now owned by just 1 percent of the population, amounting to $110 trillion—65 times the total wealth of the bottom half of the world’s population.”
“In most countries with available data, the share held by the 1 percent wealthiest population is rising at the expense of the bottom 90 percent population,” the report says.

A Barrier to Social Mobility

Conservatives often respond to concerns about inequality with two words: “So what.”

Reflecting a Darwinian philosophy, they contend that the rich earn their vast wealth thanks to their superior intelligence and talent. And they say the accumulation of wealth and income benefits the larger society.

Yet if inequality had not grown between 1990 and 2010, 200 million more people would have escaped from poverty, according to Oxfam. Had economic growth benefited the poor, more than the rich, that figure would be 700 million.

The Divergence of Productivity and Wages

One of the most important reasons for the deepening of inequality is that since the late 1970s capital has taken and ever growing portion of the increase of productivity.

From the end of World War II until then, the income of the typical family in the United States rose along with productivity. If that trend had continued, the median family income would be $9,220 higher today, according to the Economic Policy Institute.

The wages of the bottom 70 percent of earners, according to EPI data, have been basically stagnant since the late 1970s.
Between 2000 and 2013, real wages fell for the bottom 90 percent of wage earners. The real wages of 70 percent of four-year college graduates have been stagnant since 2000.

The divergence between productivity and income is happening around the world. It’s the case in nearly all rich countries and most poor countries.

From 1988 to 2011, the top 1 percent accumulated a higher percentage of global income growth than the bottom half of the global population, according to Oxfam.

Public Policy and Tax Havens

Inequality is no accident.

It results from public policies and other factors that include: deregulation; financial secrecy; the growing power of the financial sector; trade liberalization; a weakening of labor regulations; the growth of casual and part-time work; privatization; the loss of union power; globalization, and tax cuts for the wealthy and corporations.

The global elite has filled its pockets by shaping the global tax system and taking advantage of tax havens. National taxes are becoming less progressive and governments are unable to collect revenue because of cross-boarder tax dodging.
Oxfam found that:

• Among 200 companies, including the 100 largest firms in the world, nine out of 10 are present in a tax haven.

• About $7.6 trillion of individual wealth is deposited in tax havens. That’s more than the combined gross domestic product of United Kingdom and Germany.

• If taxes were paid on the income generated by offshore deposits, governments would have $190 billion more available each year for spending on public services.
Instability and the Financial Sector

The growth of the financial sector’s role in the economy has contributed to greater inequality and an increase of the concentration of political power of the economic elite.

In countries with strong financial sectors, economic growth tends to be slower.
The sector’s high salaries exacerbate inequality and the gender pay gap. In the financial sector, men with similar profiles earn 22 percent than women.

Economic and Political Upheaval?

One must wonder how much longer this economic polarization can continue until there is major economic instability, social unrest and political upheaval. Inequality along with other factors—poorly paid jobs, stagnate and falling wages and a loss of faith in democratic institutions—is behind the social, political and economic polarization evident in the presidential primaries in the United States.

High inequality is bad for the economy, according to the 2015 IMF report, “Causes and Consequences of Income Inequality: A Global Perspective.” With workers no longer receiving their fair share of productivity, their stagnating and falling wages result in lower demand, which hurts economic growth.

Deregulation has caused instability in the financial sector. Deregulation was at the root of the bursting of the housing bubble and the financial crisis of the late 2000s.

Only 38 financial crises occurred from 1945 to 1971, according to actionaid.org. The world experienced more than 130 crises between 1973 and 1997.

“Increasingly, people are saying inequality has a deep impact on economic growth and often precedes cataclysm,” says Jeffrey Madrick, author of “Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World.”

By GREGORY N. HEIRES
The middle class is dwindling as the polarization between the rich and the poor in the United States deepens.

Middle-income Americans used to outnumber lower- and upper-income Americans four decades ago. But that’s no longer true.

Battered by stagnate wages and the loss of wealth, the middle class isn’t the economic majority anymore. Millions have fallen out of the middle class as the American Dream has become less attainable.

Losing Ground

“The hallowing of the American middle class has proceeded steadily for more than four decades,” says a 2015 study by the Pew Research Center, “The American Middle Class is Losing Ground.”

“Since 1971, each decade has ended with a smaller share of adults living in middle-income households than at the beginning of the decade, and no single decade stands out has having triggered or hastened the decline in the middle.”

The share of middle class constituted 61 percent of the adult households in 1971. That year, 80 million families were middle-income, compared with the total of 51.6 million families in the other tiers.

Today, the 120.8 million people in middle-income families make up 49.9 percent of the country’s adult population of 242.1 million as the rich and poor together (121.3 million people) have become the majority, the 73-page Pew report says.

As the middle class declined, the share of the adult population in the upper-income tier households increased from 14 percent in 1971 to 21 percent in 2015. The share of the lower-income tier increased from 25 percent to 29 percent during the same period.

The Pew report classifies a three-member family with an income range of $42,000 to $126,000 a year in 2014 dollars as middle-income.

Upper-income households lived on more than $188,000 a year, and the lowest-income families lived on $31,000 or less.

The Wealth Divide

Today, the wealth gap between middle-income households and upper-income households has reached a record high, according to the Pew report.

In 1983, upper-income families owned three times the wealth as middle-income families. That disparity climbed to seven by 2013.

The Great Recession of 2007-09 wiped out virtually 30 years of the wealth gains of middle-income families.

The median wealth of middle-income families climbed from $95,879 in 1983 to $151,050 in 2007, an increase of 68 percent. That sum dropped to $98,000 in 2010.

The median wealth of upper-income families rose from $323,402 to $729,980 from 1983 to 2007. They took a big hit in the Great Recession, but their median wealth nevertheless stood at $650,074 in 2013.

SIDEBAR

Income Status Varies Among Demographic Groups
The changes in income status from 1971 to 2015, according to the Pew report “The American Middle Class is Losing Ground,” has varied among demographic groups:

• People 65 years and older were the only age group with a smaller percentage in the lower-income households in 2015 (36 percent) than in 1971 (54 percent).

Seniors were the only age group whose share in the middle-income tier grew during that period. And their share in the upper-income group grew more than that of other age groups.

Social Security has insulated seniors from being victims of the growing polarization in recent decades. Social Security provides more than 55 percent of the income of the typical senior.

• Married couples have also fared fairy well. Marriage is linked to higher education, which is tied to higher income.

• Unmarried men became more likely to live in lower-income households and slightly less likely to be in the upper tier. More than half of single mothers with a child live in the lower-income tier.

• Black adults achieved the largest increase in income status from 1971 to 2015. Their share living in lower-income households declined from 48 percent to 43 percent during that period, and the percentage in the upper tier rose from 5 percent to 12 percent.
Despite the gains, blacks are still significantly less likely to make it into the middle-income and upper-income tiers. (Between 2007 and 2013, the median wealth of households headed by college-educated blacks fell by 60 percent, according to the Federal Reserve Bank of St. Louis.)

• The share of Latino adults in lower-income families has increased to 34 percent from 1971 to 43 percent in 2015. The Pew report attributes the rise to immigration, as foreign-born Latinos earn less than U.S.-born Latinos. The share of immigrants among Latino families rose from 29 percent in 1970 to 49 percent in 2015.

• The past four decades have been a disaster for young adults, ages 18 to 29, as their share among lower-income households increased to 32 percent in 2015 from 22 percent in 1971.

• College-educated adults are much more likely than others to be in the upper-income tier, yet the share of adults with at least a bachelor’s degree in the middle-income group fell from 56 percent in 1971 to 47 percent in 2015.

• High-skilled occupations (executives, managers, professional specialty jobs, such as engineers, and medical professionals) have experienced larger increases in income status. Job categories and workers experiencing losses include teachers, retail clericals, real estate agents, mechanics, laborers, as well as communications, business services and transportation.

Plutocracy U.S.A.By GREGORY N. HEIRES
Let’s be honest: The United States has become a plutocracy.

Reports about inequality typically focus on the country’s growing income gap, now the most skewed since the Great Depression.

But the country’s class and racial divide appears to be even more staggering when you examine the distribution of wealth.

Consider the following:

• The 20 wealthiest people in the United States own more than the combined wealth of the bottom half of the U.S. population, which is made up of 152 million people in 57 million households.

• The Forbes 400—the wealthiest group in the United States—own as much wealth as the entire African-American population and one third of the Latino population combined.

• The typical American family has a net worth of $81,000. The Forbes 400 own more wealth than the 36 million families who fit that financial portrait.

These are the findings of a recent report, “Billionaire Bonanza: The Forbes 400 . . . and the Rest of Us,” by the Institute for Policy Studies. The report is based on data from the recently released 2015 Forbes 400 magazine and the Federal Reserve’s latest triennial Survey of Consumer Finances.

The report acknowledges that many members of the Forbes 400 accumulated their wealth through successful corporations and innovation. Yet they have also benefitted from public policies—tax breaks, trade rules, regulations—that work in their favor at the expense of ordinary Americans. The accumulation of wealth is accompanied by an accumulation of political power.

The Wealth Space Needle

The concentration of wealth is at its most extreme since Forbes began its top 400 ranking in 1982.

The wealthiest 400 individuals in the country have amassed a total wealth of $2.34 trillion. That is more than the GDP of India, which has a population of 1 billion people. The small group could fit comfortably into a luxury Gulfstream G650 private jet.

The distribution of wealth is usually pictured as a pyramid. The IPS report says the country’s extreme distribution of wealth is better depicted by the Space Needle in Seattle.

The bulge atop the Space Needle represents the wealthiest 0.1 percent of the U.S. population. The Forbes 400 could fit in the luxury restaurant at the top of the Space Needle.

The elite 0.1 percent group, made up of 115,000 households, holds 20 percent of the country’s total wealth, about triple of what it held in 1972 (7 percent). With a net worth starting at $20 million, the group owns more than 20 percent of the country’s wealth. In fact, the top 0.1 percent owns more than the bottom 90 percent of the population.

The Racial Gap

The wealth accumulation of African-Americans and Latinos is significantly less than that of whites:

• The homeownership rate of white Americans in 2015 is 71.9 percent. The rate of African Americans is 42.4 percent and for Latinos it is 46.1 percent.

• About 55 percent of whites own some stock. But only 28 percent of African-Americans and 17 percent of Latinos own stocks.

The wealthiest 100 members of the Forbes 400 own as much wealth as the entire African American population of 42 million people, according to the report. The wealthiest 186 members of the Forbes 400 own as much wealth as the entire Latino population of 55 million people. The Forbes 400 has only two African-American and five Latino members.

“The United States has a persistent racial wealth divide, the result of a multi-generational legacy of discrimination in asset building that began during slavery and has continued right up to the present-day discrimination in mortgage lending,” the report says.

The Social Cost of Inequality

Why should we care about inequality?

• The wealth divide undermines the trust in our political and civic institutions. In the first phase of the 2016 presidential cycle, 158 wealthy donors accounted for half of all campaign contributions.

• The poor suffer disproportionately from health afflictions, and their mortality rate is higher than more wealthy people.

• Extreme inequality leads to less upward mobility. It creates disenchantment with the political system. And it fuels economic instability.

Over decades, the wealthy have rigged our political system and economic rules to serve their interests. Policy steps that would help reverse the rise in wealth concentration include: instituting progressive wealth and estate taxes; improving the safety net; raising the minimum wage; enacting campaign reform to allow for publicly financed elections; preventing corporations from depositing profits abroad to avoid taxes and taxing capital gains at the higher rate of ordinary income.

Restructuring student loans and creating a tuition-free public college system would allow students to start their careers with manageable loan payments or debt-free.

Creating “baby bonds” –investment accounts for newborns—would allow individuals to steadily accumulate savings from the day they are born. Affordable housing would help people with modest incomes purchase homes and accumulate wealth.

Unless we act, inequality will only continue to grow, the IPS report concludes, and we will continue to live in a plutocracy of gated communities, a shrinking middle class, a political system controlled by the rich, and an unconscionable racial divide.

By GREGORY N. HEIRES Retailers bemoan the estimated $14.4 billion they lose each year to shoplifting. What they don’t like to acknowledge is that they steal more than that amount—an estimated $15 billion—by paying their workers less than the minimum … Continue reading →

By GREGORY N. HEIRES The racial wealth gap persists—with little hope of narrowing anytime soon. Today, the disparity in household wealth between whites and blacks is a national disgrace. In 2013, the average household wealth of blacks was $85,000 compared … Continue reading →